Delta Offers Buyout, Retirement Options to Workers
In an effort to cut costs after posting a first-quarter loss, Delta Air Lines, Inc., announced Friday that it is offering retirement and buyout options to about 55,000 employees.
The announcement came slightly more than a week after the company announced that it posted a $318 million loss in the first quarter, which was attributed to a 30 percent increase in fuel costs during the three-month period.
Atlanta-based Delta would not disclose how many of its 12,500 Minnesota employees are eligible for the offers, or how many employees are hoped to accept offers. The company also declined to reveal the terms of the respective offers.
Employees in the United States that have 10 or more years of service and whose years of service and age add up to at least 55 are eligible for the retirement offer. Employees who have been with the company for at least five years are eligible for the buyout offer.
According to Delta spokeswoman Gina Laughlin, most of those who are eligible for the offers are front-line workers and those in the “first few tiers of management.”
The offers are in conjunction with several other cost-saving initiatives that the company is taking, including reducing capacity by 4 percent, adjusting ticket prices, repositioning its fuel hedges-the practice of making advanced purchases of fuel at a fixed price to protect against anticipated increases-and reducing planned capital expenditures. The company is targeting capacity reductions in markets where “revenue improvements have not kept pace with rising fuel costs,” the company said in its first-quarter earnings report.
Delta also plans to accelerate the retirement of some of its least-efficient aircraft. The company plans to retire 140 aircraft within the next 18 months, a vast majority of which are 50-seat regional jets and DC-9 aircrafts, according to Laughlin.
Retirement and buyout offers are not uncommon moves for Delta. In 2009, about 2,000 employees accepted buyout offers, and about 4,000 employees accepted offers in June 2008 through work force reduction programs similar to those recently announced.
Delta is among the state's largest employers and serves more than 160 million customers each year. It maintains a significant presence at the Minneapolis-St. Paul International Airport, from which it operates more than 500 daily departures to 136 destinations worldwide.